CPD finds 7.3pc growth target unattainable

FE Report | Published: June 07, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

The local think tank Centre for Policy Dialogue (CPD) Friday said the 7.3 per cent Gross Domestic Product growth for the next fiscal year (FY) 2014-15 is "possibly a desirable target", which regrettably does not have any substantive basis.
"I think this is merely impossible to achieve the economic growth target. Attraction of huge sums of investment from the private sector in a single year is really impossible," Dr Debapriya Bhattacharya said.
"If the GDP needs to expand at 7.3 per cent rate in the coming fiscal year 2014-15, an additional Tk 750 billion or US$ 9.5 billion (or extra 4-5 per cent of GDP) private investment will be required. But how much realistic it is!" The distinguished fellow of CPD said when analysing the newly-proposed budget.
The CPD organised the budget analysis programme at the BRAC Centre Inn in the city.
Dr Bhattacharya said although the government has projected enhancement of the public expenditure to 1.2 per cent of GDP, the quality spending of funds and the upgrading of the private investment are really absent which will be a challenge for achieving the economic growth target.
He said: "A kind of anarchy is going on with the ADP (annual development programme) expenditure. If the government fails to ensure quality development spending and successful utilisation of the public fund, the targeted growth will be a far cry."
The CPD fellow criticised the Finance Minister for overlooking the issue of quality project implementation, lack of adequate fund allocations for both the priority projects and the projects to be finished within the fiscal year and inclusion of number of unapproved projects without fund allocations in the Tk 803.15 billion new ADP.
Dr Bhattacharya was critical of the minister's stance on using the two base years (1995-96 and 2005-06) for reflecting the macro-economic framework and has urged to depend on the latest base-year aimed at avoiding deviation in the statistics.
He has also demanded setting up of the Independent Statistical Commission to validate the macro-economic correlates, and data and statistics of the Bangladesh Bureau of Statistics (BBS).
The CPD fellow observed that the Tk 81 billion allocations for the Padma Bridge construction project might have an impact on the allocations for the agriculture, health and other social sectors, as those have already been reduced.
"Any other alternative sources instead of the domestic financing for the Padma Bridge project was the best option for the government," he said.
About the deficit financing of the budget, he said despite a comfortable limit of the budget deficit (5.0 per cent of the GDP), the highly ambitious financing target from foreign sources would be impossible.
"In the history of Bangladesh, the government has never been able to get more than $3.0 billion worth of foreign aid in any fiscal. But the FY 2015 budget has targeted to receive $4.1 billion worth of assistance for minimising the financing gap which is merely impossible," he said.
The fiscal framework may once again be found to be vulnerable in the face of reality, he added.
The CPD fellow said, "We think the government has fixed its expenditure target first, then the income target from the available local sources. When it has seen some deficit of money, it has planned to supply those from the foreign sources," he added.
The CPD praised the Finance Minister for tax measures, especially for reducing the corporate taxes. However, the local think tank was critical of the black money whitening provision in the budget.
"The finance minister earlier said that he would not allow black money whitening facilities in the next fiscal. But during his budget speech he did not mention anything about the issue. He ultimately has allowed the undisclosed money whitening facilities through his silence."
"On one hand, he allows the black money whitening and on other hand, he imposes wealth surcharge and 30 per cent new tax slabs on personal income above Tk 4.42 million which is a "double-standard thinking" on the part of the minister, Dr Bhattacharya said.
He said CPD had supported the finance minister's new tax measure stance, but reforms of it are required to realise the target as well as to attract more private investment in the country to achieve 7.3 per cent growth.
About the fiscal measures, the CPD distinguished fellow urged the government to offer similar tax-at-source facilities for the struggling jute sector, like the offer to the ready-made garment sector in the upcoming fiscal year.
On the energy and power sector allocations, the CPD fellow said the government should put emphasis not only on allocating higher funds for the base-load power station installation projects, it should also ensure implementation of those on time.
On the district budget, Dr Bhattacharya said: "The government should be more realistic about fund allocation for the seven districts. If we consider the allocation pattern, the government needs 80 per cent of its total expenditure for the 64 districts. How the central government could run with the remaining 20 per cent money!"
About the proposed budget for FY 2015, Dr Bhattacharya said the budget seems to have abandoned the 6th five-year plan and has not made any indication at the coming 7th five-year plan, to be started from FY 2016.
"The budget has had a lack of reflection of the political manifesto. Usually, the newly elected government always proposed budget in a very much enthusiastic mood to implement its election manifesto. But I think the finance minister did not have such enthusiasm in his budget proposal," Dr Bhattacharya added.
The CPD fellow has urged the government to ensure good political and business environment for improving the public investment for boosting the country's economy.
CPD's executive director Professor Mustafizur Rahman and other researchers were also present at the programme.